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How wealth managers are pitching their restricted status to the public
by Danielle Levy on Aug 27, 2013 at 11:26
The retail distribution review has overhauled the way independent financial advice is described. We look at how five private client investment firms are disclosing their new found restricted status.
The retail distribution review (RDR) has overhauled the way that investment advice is delivered and described, marked by a new definition of independence.
The new rules, which were introduced in January are full of intricacies, as firms seeking to describe themselves as independent have to advise on the full scope of retail investment products, which includes life assurance policies and pensions. This means pure investment management firms with no in-house financial planning capability are now classified as restricted.
Even businesses that offer financial planning may be unable to meet the new standard, as the person who is in charge of the advice process must personally cover the whole range of retail investment products.
The Financial Conduct Authority’s (FCA) thematic RDR review, undertaken between February and April, concluded a number of firms were not clearly disclosing the nature of their newfound restricted status.
Under the rules, firms must disclose their status before services are provided and if they are restricted, provide details of the restrictions. Although the regulator has not been prescriptive on the wording firms can use, it said it had found instances where it was hard for the client to understand the nature of restrictions.
In the post-RDR world Wealth Manager has shone the spotlight on how five private client firms are disclosing their restricted status.
‘While Brewin Dolphin looks across a wide range of financial products and services in order to meet your needs and objectives, we will not review all retail investment products in the market. As such we offer a “restricted advice” service.’Rathbone Investment Management
‘We are an independent provider of discretionary investment management services for our clients, selecting and managing investments across the whole of the relevant investment market. As we do not advise on pensions and life assurance policies, any personal recommendations we make to clients in respect of retail investment products are defined under the FSA rules as being restricted.’
‘Charles Stanley & Co Limited offers clients a wide range of different financial services to suit their needs. We provide a comprehensive service – advising on, managing and buying and selling stocks, shares, unit trusts, gilts, corporate bonds and a wide range of other financial instruments. These services do not extend automatically to advice or management in relation to clients’ overall financial planning arrangements, or to any individual aspect of their financial requirements other than stockmarket and stockmarket based investments. Our advisory investment services are therefore classed as “restricted”, since they are designed specifically for investors seeking specialist expertise and advice on investments and investment portfolios. As an independently-owned firm, we are not tied to any products or providers.’
Investec Wealth & Investment
'At Investec Wealth & Investment, we are able to offer both ‘independent advice’ and ‘restricted advice’ services. We have decided that the ‘restricted advice’ route is most suitable for the investment management services which we provide to you. This is because our investment managers are specialists in these services and do not provide advice on all retail investment products, such as life policies or pensions planning. However we can advise you on all types of investments and structure a diversified portfolio including units in collective investment schemes, as well as bonds, shares and cash. Meanwhile for clients who do not already have a financial adviser, we can also offer ‘independent advice’ via our financial planning service, which can consider all types of products and services which may be suitable for you, beyond the specialist area of investment management. What does this mean for you? You should experience little change with regard to the new regulatory requirements, as Investec Wealth & Investment will continue to provide clear and unbiased specialist advice in the areas where you require our services. No action is required on your part, but if you have any questions regarding the RDR, please do not hesitate to contact your investment manager.'
'When we provide investment advice it is on the basis of a restricted approach. That is to say, whilst we review and advise on retail investment products from the whole of the investment market and can also advise you on direct investments, we will not consider your wider financial planning and pension requirements, unless you wish us to do so when we will refer you to one of our wealth planners.'